Why Did Ephrata, Washington Impose A Ban On Cryptocurrency Mining?

By Ghazala Rizvi

Posted on Nov. 7, 2018

The city of Ephrata, Washington was recently in news for banning mining of cryptocurrency and laying off any new crypto-mining developments for at least one year. This recent development in the crypto-mining policy will definitely affect the new budding crypto market while the existing well-established crypto businesses in the city will continue their business operations as usual. The decision was taken by authorities of the city council and concerns regarding economic development as well as power consumption were raised. It is not the first time that any city has banned crypto-mining. There have already been a number of crypto-mining regulations in the Grant County Public Utility District (PUD). In late July 2018, PUD commissioners approved freezing of crypto-mining operations in order to get some extra time to investigate the impact of mining on the electrical power systems.

Cryptocurrencies have been creating alarming situations for using enormous amount of electricity used to mint new virtual coins. As crypto-mining involves a large amount of revenue generation, people are very willing to run power-hungry machines and large hardware devices to get into this block mining cycle. According to report published by a Bitcoin expert named Alex de Vries, estimates have been made that the current global power consumption for the servers that run Bitcoin’s software is a minimum of 2.55 gigawatts (GW), which amounts to energy consumption of 22 terawatt-hours (TWh) per year.

In the near future, the consumption could reach 7.67 GW, making it comparable to that of countries such as Ireland (3.1 GW) and Austria (8.2 GW). For now, the Bitcoin community is experimenting with new projects such as Lightning Network to improve the output of the network which may pacify this power consumption situation.

Cryptocurrency value plays a vital role in mining and hence, the electric power consumption. For example, considering the Bitcoin value in December 2017 which was 20,000 USD, mining had become a profitable business suddenly, and there was a shoot up in the power consumption figures. On the contrary, if the prices of the crypto coins fall, mining business is affected which results in a fall in the energy usage as the high efficiency mining equipment are turned off by the miners. A majority of the total Bitcoin network originates from mining machines that are clustered together to form mining facilities. These machines consume heavy power and generate a large amount of heat. Hence, a separate cooling arrangement has to be provided to keep the system running. The overall electrical consumption of the mining facility depends significantly on the class and technology of the mining machines and cooling systems. Although, the power usage effectiveness of these mining facilities is not well known because their operations are not open, the statistics related to electric consumptions can be validated by economic angles.

The ban in virtual coin mining in Ephrata for one year is to seek alternatives and investigate the effects and inconveniences for the residents. Mining is an energy-intensive computational process and the local residents of Ephrata are suffering from a lack of electricity due to the operation of the high energy-consuming cooling equipment by the local crypto-miners.